What is a Freight Broker?

Published: Oct 20, 2022
What is a Freight Broker?
 

A freight broker is the middle man between freight carriers and shippers. Freight brokers work with both shippers and carriers to get cargo where it needs to be and ensure the supply chain runs smoothly.

Although freight brokers never take possession of the freight itself, they’re responsible for making sure it navigates its way through the often-complex world of national and international transportation. A good freight broker should make life easier for both the shipper and the carrier and ensure the freight reaches its final destination safely and on time.

Because freight brokers play an essential role in the transportation industry, they’re legally required to register with the Federal Motor Carrier Safety Administration (FMCSA). This helps to ensure that all companies and individuals offering freight broker services operate according to the rules and regulations set out by their governing body.

What Does a Freight Broker Do?

Freight brokers arrange for freight to be transported from point A to point B. When a freight agent is approached by a shipper, they’ll use their network of carriers to find quick, cost-effective and professional transport for the shipment and track the cargo until it reaches its destination.

The freight broker company will charge the shipper for the transportation of their cargo and take a percentage of this fee as payment for their services. The rest of the fee will be passed onto the truck driver or trucking company.

Freight brokers play a key role in the trucking industry as they help provide crucial services for shippers and help transportation companies and independent contractors find loads and avoid costly deadhead journeys.

Because freight brokers work with a large volume of freight, they’re able to secure excellent prices for their clients. Freight brokerage companies often have high tech transport management systems (TMS) to help streamline logistics and ensure all of their loads arrive on time.

Key Responsibilities

The key responsibilities of a freight broker are:

  • Generating leads and attracting new clients
  • Identifying and selecting reputable and safe carriers for freight services
  • Nurturing a network of trusted carriers
  • Providing customers with accurate shipping quotes
  • Booking shipments with carriers
  • Ensuring the handoff goes smoothly
  • Tracking loads until they reach their destination

Freight Broker Skills and Qualifications

Working as a transportation intermediary requires a number of skills and qualifications. For a start, a successful freight broker needs to be a good communicator and have excellent people skills. Freight brokers are required to work with both shippers and carriers and will need to ensure all parties are satisfied with the transportation process.

If any problems do arise during the pick up, shipping or delivery of the cargo, it’s the freight broker who will need to work to resolve the issue. If a freight broker is a good negotiator and enjoys working with people, they’ll find it a lot easier to manage clients and carriers and keep everyone happy.

Problem solving is another important skill that freight brokers need to master. The job often involves navigating complex transportation networks and juggling freight to ensure shipments arrive quickly and every driver has a full truckload before setting off. Good problem solving skills will help brokers to manage their various shipments and keep the supply chain running smoothly.

Good management skills, experience of running a business and an in-depth knowledge of relevant computer software, like load boards, will also help freight brokers to succeed.

What Role Do Freight Brokers Play in the Logistics Industry?

Freight brokers play an integral role in the logistics industry. By connecting shippers with carriers, they enable cargo to be moved around the country – and around the world – quickly and affordably. This can help to prevent less-than-truckload (LTL) shipments and deadhead journeys, making the industry more efficient and helping both shippers and carriers to protect their bottom line.

How to Become a Freight Broker

Freight broker services are in demand across the country. This makes it a good career choice for anyone with an interest in logistics and a talent for problem solving.

The most important step in becoming a freight broker is securing your freight broker license. To get your freight broker license you’ll need to register with the FMCSA. In order to register with the organization, you’ll first need to arrange relevant insurance and get bonded.

The surety bond required by the FMCSA is the BMC-84 bond. This $75,000 bond is designed to ensure all freight brokers abide by the rules and regulations set out by the broker authority. It also protects the public from any financial losses that may occur as the result of unscrupulous or fraudulent business practices.

Once you’ve got your bond and secured your insurance, you’ll be able to register as a licensed freight broker with the FMCSA and start working.

If you’re looking into how to become a freight broker, you may also find other roles within the freight shipping business of interest. Some of the key positions available are:

  • Agricultural truck broker
  • Freight forwarder
  • Freight agent
  • Import-export broker

An agricultural truck broker is an unregulated broker who arranges services for exempt agricultural products. These brokers are generally smaller and operate in one region of the country.

A freight forwarder is responsible for consolidating multiple small shipments into a single larger load. They then use air, land or sea carriers to move the larger shipment all at once. This can make transportation a lot more affordable.

Freight agents are independent contractors that work for freight brokers. They carry out roles including sales, customer services and logistics on behalf of the broker. Freight agents are not licensed or bonded.

Import-export brokers facilitate the movement of goods through international channels. They often work with government agencies and global businesses to smooth the passage of international goods.

Becoming a licensed freight broker will allow you to act as a logistics provider

and intermediary between shippers and carriers. To find out more about the licensing process, and to learn how we can help you to secure your freight broker bond, take a look around or get in touch with a member of our expert team.

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Robin Kix

Robin Kix is currently the Renewal Department Manager. Since joining Lance Surety in 2014, she has helped thousands of businesses throughout the nation remain compliant at the federal, state and local level. She has significant experience supporting commercial bond lines, particularly in the automobile, transportation and construction industries. Robin and her team work together to create a positive customer service experience at the time of every policy renewal, whether that be finding the best pricing or offering additional assistance.